WASHINGTON—ITT Corporation, the leading manufacturer of military night vision
equipment for the U.S. Armed Forces, has admitted sending classified materials
overseas and will pay a $100 million penalty, Assistant Attorney General for
the National Security Division Kenneth L. Wainstein and U.S. Attorney for the
Western District of Virginia John L. Brownlee announced today, along with the
Defense Criminal Investigative Service (DCIS) and U.S. Immigration and Customs
Enforcement (ICE).

The corporation will pay a total monetary penalty of $100 million, one of the
largest penalties ever paid in a criminal case. ITT Corporation will also be
the first major defense contractor convicted of a criminal violation of the
Arms Export Control Act.

According to the written plea agreement to be filed in U.S. District Court in
Roanoke, Va., ITT Corporation will plead guilty to one count each of export of
defense articles without a license and omission of statements of material facts
in arms exports reports.

Assistant Attorney General Wainstein said, “The sensitive night vision systems
produced by ITT Corporation are critical to U.S. war-fighting capability and
are sought by our enemies and allies alike. ITT’s exportation of this sensitive
technology to China and other nations jeopardized our national security and the
safety of our military men and women on the battlefield. We commend the
prosecution team and ITT Corporation for developing a plea agreement that
addresses the violations of the past, ensures compliance in the future, and
serves as a strong warning to others who might be tempted by the profits of
such illegal exports.”

“The superior quality of our night vision technology gives the United States
Armed Forces an enormous advantage on the battlefield. Sending sensitive
information on these advancements overseas without the necessary licenses puts
that advantage in jeopardy,” said U.S. Attorney John Brownlee. “We hope the
agreement reached with ITT will send a clear message that any corporation who
unlawfully sends classified or export- controlled material overseas will be
prosecuted and punished. In addition, the remedial action plan that is part of
this agreement is designed to bring ITT Corporation back into full compliance,
which will benefit both the corporation and the United States.”

Daniel F. Willkens, Acting Director of the Defense Criminal Investigative
Service (DCIS), said, “The illegal export of U.S. military technology and
equipment threatens our national security in the most direct way. This
settlement demonstrates the commitment of the Defense Criminal Investigative
Service and the U.S. Immigration and Customs Enforcement to ensuring that
critical technologies do not fall into the wrong hands and that America's
warfighters maintain their tactical and strategic advantage around the world.
American security and its critical military technology are simply not up for
sale.”

“Placing profits ahead of the security of our nation is simply not acceptable
for any corporation,” said Julie Myers, Department of Homeland Security
Assistant Secretary for U.S. Immigration and Customs Enforcement (ICE). “Export
violations that compromise our technology pose a potentially deadly threat to
our military and our nation. As such, these violations are among the most
serious of crimes. Today’s case illustrates that corporations engaging in these
illegal and reprehensible business practices will pay a heavy price.”

Sensitive Military Data to China, Singapore and United Kingdom:

According to count one of the information to be filed in U.S. District Court in
Roanoke, between March 2001 and August 2001, ITT Corporation exported or caused
to be exported defense-related technical data to the People’s Republic of China,
Singapore, and the United Kingdom without having first obtained a license or
written authorization from the U.S. Department of State. The technical data
included information about a laser counter measure known as a “light
interference filter” for military night vision goggle systems. These night
vision goggles are designated as defense articles on the U.S. Munitions List,
and companies are required to have a State Department license or written
authorization before exporting them.

Count two of the information charges that between April 2000 and October 2004,
ITT Corporation left out material facts from Arms Exports Required Reports. The
omission of these material facts made the reports misleading. ITT Corporation
was aware that it was violating its export licenses for night vision goggles
but failed to take significant corrective action to stop the ongoing violations
until shortly before it informed the Department of State about the violations.

ITT Corporation has entered into a plea agreement with the United States
whereby the corporation will plead guilty to counts one and two of the
information as described above. As part of the plea agreement, ITT Corporation
will enter into a deferred prosecution agreement with the United States whereby
the United States will defer prosecution of counts three and four for five
years. In return, ITT Corporation will accept full responsibility for its
illegal actions and will successfully implement an extensive Remedial Action
Plan.

As part of the $100 million penalty, ITT Corporation will pay a $2 million
criminal fine, a $50 million deferred prosecution penalty, and will forfeit $28
million to the United States as the proceeds of its illegal actions. ITT
Corporation will also pay a $20 million monetary penalty to the Department of
State.

$50 Million Towards Development of More Advanced Night Vision Systems:

Payment of the $50 million deferred prosecution penalty will be suspended for
five years, subject to certain conditions. ITT Corporation can reduce this
penalty on a dollar-for-dollar basis by investing $50 million toward the
acceleration, development and fielding of the most advanced night vision
technology so that the members of the U.S. Armed Forces can maintain their
battlefield advantage of having the most capable night vision equipment in the
world.

The case was investigated by Special Agents John Schoeneweis and Malachi Blake
of the Defense Criminal Investigative Service, the investigative arm of the
Office of the Inspector General, Department of Defense, as well as Special
Agents David Guerrant and Peg Roberts of the U. S. Department of Homeland
Security, U.S. Immigration and Customs Enforcement.

Assistant United States Attorney Stephen Pfleger is prosecuting the case.